FMCG Stocks Rally as Investors Seek Safety Amid Tariff Turmoil and Rate Cut Boost

Investments Indian Investments

Posted by NewAdmin on 2025-04-09 08:39:24 |

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On April 9, shares of fast-moving consumer goods (FMCG) companies witnessed a strong rally, emerging as the standout sector amid a broadly weak market environment. The Nifty FMCG index climbed nearly 2 percent, making it the biggest sectoral gainer of the day. This surge was led by gains in key stocks such as Nestle India, Godrej Consumer Products, Emami, Hindustan Unilever, and Colgate Palmolive. Nestle India and Godrej Consumer Products rose by almost 3 percent, while others in the segment posted steady gains.

The upward momentum in the FMCG sector was further supported by positive movements in other major players. Britannia Industries, Marico, United Spirits, ITC, Dabur, and Tata Consumer Products saw their shares trade around 1 percent higher. Varun Beverages and United Breweries also posted modest gains. However, not all stocks followed the upward trajectory. Patanjali Foods and Radico Khaitan were among the few that ended in the red with marginal losses.

Investor interest in FMCG stocks was primarily driven by the sector’s domestic focus and defensive characteristics, making it an appealing safe haven during periods of uncertainty and volatility. With US President Donald Trump’s aggressive reciprocal tariff moves heightening fears of a global trade war and economic slowdown, investors are showing a preference for sectors less exposed to international markets. The relative insulation of FMCG companies from global disruptions provides a sense of stability in the current environment.

Adding to the optimism was the Reserve Bank of India's recent policy stance. RBI Governor Sanjay Malhotra announced a downward revision in the CPI inflation forecast for FY26 to 4 percent from the earlier 4.2 percent and a 25 basis points cut in the repo rate, bringing it to 6 percent. This rate cut is seen as a proactive measure to support domestic consumption, especially among small and medium enterprises that may be impacted by the trade tensions.

Experts believe that the rate cut, while potentially putting pressure on the rupee, could stimulate internal demand. As foreign investors pull funds from emerging markets, domestic-focused sectors like FMCG are gaining traction due to their resilience. The RBI’s approach to supporting growth and easing inflation concerns is expected to bolster investor confidence in these stocks further.

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